2020 (1) TMI 637 - AT - Central Excise

Common registration for two units - different territorial jurisdiction - eligibility for common registration for their Duliajan plant and Lepetkata plant by inclusion of the former in their registration certificate already issued for the latter - Admissibility of CENVAT credit on the capital goods received in their Duliajan plant. Registration - whether the appellant s Duliajan plant where the gas is merely dried and compressed for supply to their manufacturing facility at Lepetkata located 48 km away should be considered as part of the same manufacturing facility and included in their registration or otherwise? - HELD THAT - Section 3 of the CE Act is the charging section and the other sections are the machinery sections which provide the modalities for giving force to the charging section (including the provisions for registration) - From this section, it is evident that there must be goods which are excisable goods and which must be either manufactured or produced for this charging section to apply. If these elements are missing, the activity falls outside the scope of this Act. The key terms used in the charging section are excisable goods , manufacture and production . Excisable goods is defined in Section 2 (d) and manufacture in section 2 (f). The term production is not defined in the Act and neither is the term goods . Central Excise Registration is required for a manufacturing facility and not for any facility owned by the manufacturer. If there are more than one manufacturing facilities, each of these require a separate registration. In fact, the appellant themselves have two registrations. There are cases where the same factory is split on to opposite sides of a road or pipeline or railway track. In such cases, effectively, it is the same factory with different parts of it working on either side. For such cases, CBEC s manual instructs that a single registration may be given - The present case is not one such. It is case where the assessee has a registered manufacturing facility and a facility 48 km away where no manufacturing but only some processing (which undisputedly does not amount to manufacture) takes place and the two facilities have a common pipe through which the processed gas is transported to the manufacturing facility. Thus, the appellant is not entitled to get their Duliajan processing plant included in their registration for Lepetkata manufacturing plant. CENVAT Credit - whether the appellant is entitled to the CENVAT credit on the capital goods and services received at their Duliajan plant even if it is not part of their registered premises? - HELD THAT - A plain reading of Rule 2 (l) of the CCR, 2004 makes it clear that there is no room in them to provide for Capital Goods credit on capital goods used in a processing facility outside the factory which does not manufacture any goods but only supplies the processed goods as inputs to the manufacturing facility - Similarly, there is no scope in the Rules to allow CENVAT credit of service tax paid on services used not in the manufacturing facility itself but elsewhere in a processing facility owned by the same legal entity. Thus, the appellant is not entitled to CENVAT credit on the capital goods installed and the services used in their processing plant in Duliajan. Appeal dismissed - decided against appellant.

Summary

Issues Involved:
1. Eligibility for common registration for Duliajan and Lepetkata plants.
2. Admissibility of CENVAT credit on capital goods received in Duliajan plant.

Issue-wise Detailed Analysis:

1. Eligibility for Common Registration:
The appellant sought inclusion of their Duliajan plant in the registration certificate of their Lepetkata plant, arguing that both plants are interconnected through a 48 km pipeline and should be treated as a single unit. The appellant relied on CBEC’s manual, Chapter 2, para 3.2, which allows for single registration if two premises are part of the same factory but segregated by public infrastructure like roads or railways.

However, the Tribunal noted that the Duliajan plant only processes gas and does not manufacture any new marketable commodity. The legal provisions under the Central Excise Act, 1944, and the Central Excise Rules, 2002, require separate registration for each manufacturing facility. The Tribunal emphasized that the CBEC’s manual applies to cases where a factory is split by public infrastructure, not to cases where two distinct units are merely connected by pipelines. Thus, the Tribunal concluded that the Duliajan plant cannot be included in the registration of the Lepetkata plant.

2. Admissibility of CENVAT Credit:
The appellant argued that they should be allowed to avail CENVAT credit on capital goods and services used in the Duliajan plant, even if it is not part of their registered premises. The Tribunal referred to the CENVAT Credit Rules, 2004, which define capital goods and input services. The rules specify that capital goods must be used in the factory of the manufacturer of the final products to be eligible for credit.

The Tribunal noted that there is no provision in the rules to allow CENVAT credit for capital goods used in a processing facility outside the manufacturing unit. The Tribunal also referenced the Supreme Court's decision in Commissioner of Customs (Import) Mumbai vs Dilip Kumar and Company, which mandates strict interpretation of fiscal statutes without any intendment. The Tribunal distinguished the present case from the Vikram Cement case, where MODVAT credit was allowed for inputs used in captive mines, noting that the current case concerns capital goods, not inputs.

Therefore, the Tribunal concluded that the appellant is not entitled to CENVAT credit on the capital goods and services used in the Duliajan plant.

Conclusion:
The appeal was rejected, and the Tribunal upheld the decision of the Commissioner of CGST & Central Excise, Dibrugarh, refusing to grant common registration and disallowing CENVAT credit on capital goods used in the Duliajan plant.